Our Weekly Newsletter

Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

News you can use

“Black swan” funds score record gains after profiting from the market meltdown

“Black swan” funds are up a record 57%, while many investors suffered heavy losses following the Covid-19 sell-off, according to the CBOE Eurekahedge Tail Risk Hedge Fund Index. The funds, which profit from extreme market events, reaped the benefits of the surge in volatility after enduring eight years of losses. Among these is Capstone Investment Advisors, who reported a 350% gain in the first quarter, while 36 South Capital Advisor’s Kohinoor fund is reportedly up more than 130%. (From Business Insider, 28 April 2020)

Many UK start-ups have less than a year’s cash left

A survey of 200 UK start-ups by London venture capital firm LocalGlobe reveals that two-fifths of respondents only have enough cash to last them less than a year. Meanwhile, a Silicon Valley-based research project, Startup Genome, predicts that 41% of start-ups have a cash runway of three months. While fundraising has been delayed, the UK announced a £1.25bn bailout plan for start-ups this week, targeting unlisted UK-registered companies that have raised at least £250,000 in equity investment in the past five years. (From Financial Times, 27 April 2020)

Surviving coronavirus will bring “huge confidence” to P2P asset class, says RateSetter chief

The CEO of RateSetter, Rhydian Lewis, speculates that the fintech industry could witness increased confidence in alternative lending platforms amid the Covid-19 crisis. Commenting at UK Fintech Week 2020, Lewis argued that since the pandemic emerged, “fintech is looking more resilient and maybe more adaptable […] it’s possible that this crisis will show that platform lending is extremely fit for purpose”. He also pointed to the more aligned interests of lending platform investors who are willing to take risks to secure a return, aiding the levels of lending in this environment. (From altfi, 28 April 2020)

FCA warns banks not to put pressure on clients during pandemic

The Financial Conduct Authority (FCA) is cracking down on banks taking advantage of corporate clients seeking financial help in the current pandemic. The markets watchdog has sent a letter to bank chief executives warning that they will not hesitate to act following reports that lenders were using loan negotiations to pressure clients into hiring the banks for separate share sales. The regulator added that forcing clients to take additional services risked distorting competition and could also increase overall costs for companies attempting to raise emergency funds. (From The Guardian, 28 April 2020)

Coronavirus “will hasten the decline of cash”

Experts are predicting the coronavirus crisis will rapidly increase the decline in the use of cash as a growing number of people switch to making digital payments. The lockdown has led to a 60% fall in the number of withdrawals from cash machines, partly driven by more people using card payment methods to purchase shopping online. Social distancing measures have also resulted in mass cafe, pub and restaurant closures, meaning people are going out less, which has resulted in a steep fall in demand for regular cash withdrawals. (From the BBC, 29 April 2020)